High Court Justice Forrest Miller last week found in favour of the Fay group when it sought a review of the Overseas Investment Office (OIO) and ministerial approval granted to Shanghai Pengxin to buy the farms.

Justice Miller upheld the challenge on the grounds the OIO and ministers did not assess the bid's economic benefits correctly. However he dismissed the Fay group's contention that Shanghai Pengxin lacked the necessary business experience and acumen to run the farms.

The Fay group's lawyer David Cooper of Bell Gully this afternoon confirmed he had initiated the Court of Appeal proceedings.

He said the group wanted to challenge Justice Miller's decision on the relevant experience and acumen issue as a second avenue of legal challenge against Shanghai Pengxin's application. That was in case the OIO and ministers gave the bid the green light when reconsidering it against the economic benefits test stipulated by Justice Miller.

However Shanghai Pengxin spokesman Cedric Allan said the Fay group's criticism of the Chinese company's farming credentials were part of "a self serving campaign of allegations and half-truths".

"Pengxin is not only a major developer and builder of retail, residential, hotel and infrastructure projects. The company has won awards for its work throughout China and has successfully managed offshore investments including copper mining in the Republic of Congo, and a controlling interest in a profitable cropping farm in Bolivia, half as big again as all the Crafar farms.

"The company has been involved in cropping and sheep farming in China for years, with a target of having three million sheep within five years."

Mr Allan said the Fay group's offer for the Crafar farms was a "phantom bid" which had already been rejected by the receiver.

While Shanghai Pengxin would be monitored by the OIO for compliance with the terms of its offer if it succeeded, the Fay group would not, allowing it to promise "whatever they like".